Taylor & Edwards Inc. manufactures television sets. Last month, direct materials

Question

Taylor & Edwards Inc. manufactures television sets. Last month, direct materials (electronic components, etc.) costing $550,000 were put into production. Direct labor of $880,000 was incurred, manufacturing overhead equaled $495,000, and selling and administrative costs totaled $396,000. The company manufactured 8,400 television sets during the month. Assume that there were no beginning or ending work in process balances. What was the amount of cost of goods manufactured last month?

$1,925,000

$1,250,000

$1,300,000

$2,110,000

Explanation / Answer

This is aggregate of direct material cost, direct labor cost, and manufacturing overhead. Selling and administrative cost is not a part of it; therefore, should not be considered.

Cost of goods manufactured = Direct material + Direct labor + Manufacturing overhead

                                                = 550,000 + 880,000 + 495,000

                                                = 1,925,000

Answer: 1st option

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